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INCOME TAXES

12 Months Ended

Dec. 31, 2020

NOTE K - INCOME TAXES

The components of income tax expense are as follows ($ in thousands):


	Years Ended December 31,
	2020		2019		2018
Current:
Federal	$	11,270	$	9,477	$	2,435
State		2,308		2,312		834
Deferred		(3,015)		912		2,523
Total income tax expense	$	10,563	$	12,701	$	5,792

The Company's income tax expense differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows ($ in thousands):


	Years Ended December 31,
	2020				2019				2018
	Amount		%		Amount		%		Amount		%
Income taxes at statutory rate	$	13,244	21	%	$	11,854	21	%	$	5,674	21	%
Tax-exempt income		(1,868)	(2)	%		(1,176)	(2)	%		(867)	(3)	%
Bargain purchase gain		(1,645)	(3)	%		—	—			—	—
Nondeductible expenses		188	—	%		348	1	%		403	1	%
State income tax, net of federal tax effect		1,600	3	%		1,969	4	%		1,058	4	%
Tax credits, net		(715)	(1)	%		(334)	(1)	%		(334)	(1)	%
Other, net		(241)	(1)	%		40	—	%		(142)	(1)	%
	$	10,563	17	%	$	12,701	23	%	$	5,792	21	%

The components of deferred income taxes included in the consolidated financial statements were as follows ($ in thousands):


	December 31,
	2020		2019
Deferred tax assets:
Allowance for loan losses	$	9,062	$	3,430
Net operating loss carryover		2,147		2,830
Nonaccrual loan interest		1,356		895
Other real estate		252		506
Deferred Compensation		1,285		1,190
Loan Purchase Accounting		2,268		3,467
Right-of-use asset		2,103		1,650
Other		2,046		2,146
		20,519		16,114
Deferred tax liabilities:
Unrealized gain on available-for-sale securities		(8,743)		(3,417)
Securities		(880)		(81)
Premises and equipment		(7,698)		(5,002)
Core deposit intangible		(7,051)		(6,864)
Goodwill		(1,906)		(1,631)
Right-of-use liability		(2,103)		(1,650)
Other		(550)		(331)
		(28,931)		(18,976)
Net deferred tax asset/(liability), included in other assets/(liabilities)	$	(8,412)	$	(2,862)

During 2020, the Company assumed a deferred tax liability of $2.5 million in its acquisition of SWG as well as utilized provisions of the CARES Act to carryback $712 thousand of net operating losses acquired as part of its 2019 acquisition of FPB.

With the acquisition of Baldwin in 2013, Bay in 2014, Gulf Coast in 2017, Sunshine 2018, and FPB in 2019, the Company assumed federal tax net operating loss carryovers. $14.7 million of net operating losses remain available to the Company and begin to expire in 2026. The Company expects to fully utilize the net operating losses.

The Company follows the guidance of ASC Topic 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2020, the Company had no uncertain tax positions that it believes should be recognized in the financial statements. The tax years still subject to examination by taxing authorities are years subsequent to 2016.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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